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Eurozone industrial output logs biggest gain in two years

Industrial output across the 17-member euro area has rebounded, raising hopes the sector will contribute to economic growth in the months ahead. But a strong euro might put a dampener on current expectations.

Industrial production in the eurozone increased by a better-than-expected 1 percent in August, data released by Eurostat showed Monday.

The European statistics agency indicated output had regained a sound footing after dipping by 1 percent in the previous month and raising doubts the single-currency bloc had really left behind a protracted recession period.

"August's rebound should remove concerns about a near-term relapse in the eurozone economic recovery," ING analyst Martin van Vliet said in a statement in commenting on the bloc's biggest monthly output gain since July 2011.

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"However, with the fragility of domestic demand, some key emerging markets slowing down and the US budget crisis unresolved, downside risks remain," he added.

Market experts agreed that the elevated value of the euro might also have a negative impact in the months ahead as a strong single currency would potentially make exports less competitive in the international marketplace.

The August results showed Portugal had booked the largest increase in output, with production surging by 8.2 percent, while Malta recorded a 7.2-percent jump. Germany for its part saw its industrial output grow by a more modest, but above-average 1.8 percent in the same month.